Banks loan less to Detroit businesses in neighborhoods with more minorities

DETROIT, August 10-- A study looking at business loans in metro Detroit confirmed the adage that banks lend money to people who don't need it.

It also found a pattern of lending that could be a result of discrimination.

The 42-page report, released today by the Woodstock Institute in Chicago, found wide disparities in lending in Detroit and nationwide when considering income and race.

"If you are not lending in neighborhoods, entrepreneurs there can't create jobs," the study's author, Spencer Cowan, said in a conference call. "They can't sustain businesses. They can't provide needed services for local residents. The neighborhood declines."

The study, one in a series of reports that the research and policy group has published, looked at bank lending to businesses in Detroit and Richmond, Va., with the aim of determining whether small businesses were able to get the capital they needed.

It was paid for by foundations, banks and nonprofit organizations.

The study found businesses in low-income and high-minority areas proportionally received fewer loans.